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The impact of policy uncertainty and risk taking on the credit resource allocation of urban commercial banks

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  • Yao, Jianfeng
  • Fan, Jianfei

Abstract

This paper investigates the impact of policy uncertainty and risk-taking on the credit resource allocation of urban commercial banks, using data from 30 urban commercial banks over the period 2012–2022 as a sample. The empirical results show that policy uncertainty reduces the allocation of credit resources by urban commercial banks; risk-taking is positively correlated with the allocation of credit resources by urban commercial banks; capital adequacy ratio plays an intermediary role in the relationship between risk-taking and credit resource allocation; the impacts of policy uncertainty and risk-taking on credit resource allocation among urban commercial banks with different equity natures exhibit variabilities. Specifically, policy uncertainty has a more pronounced effect on credit resource allocation in urban commercial banks controlled by local governments, whereas risk-taking exerts a more significant influence on credit resource allocation in those controlled by non-local governments; the impact of risk-taking on the allocation of credit resources by urban commercial banks exhibits a threshold effect, showing different characteristics as the size of the bank changes.

Suggested Citation

  • Yao, Jianfeng & Fan, Jianfei, 2025. "The impact of policy uncertainty and risk taking on the credit resource allocation of urban commercial banks," International Review of Economics & Finance, Elsevier, vol. 97(C).
    • Handle: RePEc:eee:reveco:v:97:y:2025:i:c:s1059056024007585
    DOI: 10.1016/j.iref.2024.103766
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